No Comments

What Can a Tenant Representation Broker Do For Me?

commercial real estate broker

Got Difficulties?  No problem.

 

If you are seeking commercial office space to lease for your business, hiring a skilled tenant representation broker is the way to go.  With a tenant representation broker, you will find that many of the difficulties associated with finding commercial space will be alleviated.   A good tenant rep broker will find you the office space that meets your companies needs while paying attention to your bottom line.  Read on to find out what a tenant representative can do for you:

 

#1  Offer Industry Insight

During the search or the negotiation process, you might have some questions to ask about choosing the ideal office space and what makes the most sense for you.  A tenant representation broker will enlighten you on areas where you hold leverage as well as areas where the landlord may not budge on negotiations.  This knowledge comes from handing several transactions in your respective market.

 

#2  Help You Establish Your Needs

 

With some experience in the bag, tenant representatives know the right questions to define what kind of office space will be ideal for your company. After a meeting with your tenant rep broker, you may find that your primary idea of a perfect office might not be the best fit for your company after all.

 

#3 Explain Your Market

 

It is challenging to determine whether you’re getting a fair deal from a landlord if you don’t have an accurate understanding of the market. A tenant rep broker can provide you with data to help you see how an offer measures up against current market rates in the area.

 

#4  Tell You About Pocket Listings

 

Many office spaces are not advertised to the general public. Landlords need tenants so they tend to have good relationships with tenant reps.  This direct connection to the landlord can help you gain access to places that you may not have considered or had access to on your own.  Experienced tenant brokers are familiar with the tenants in the buildings located in their sub-markets and know those who are not renewing their leases.  This insider knowledge could afford you the option to snag a great and sought-after space.

 

#5  Have the Right Connections

 

A lot of tenant rep brokers have existing relationships with space planners, interior designers, and real estate attorneys and can help you with referrals for capable professionals whose services you may need in the future.  If you have a good tenant rep, they may help you manage some level of the build-out stage.

 

#6  Help You Win Leverage

 

When you have a tenant representative beside you on the table, you’ll have an extra advantage during the negotiation process. The tenant rep broker will argue in favor of your company and help you engage the prospective landlord. They will make sure you get favorable concessions and make sure all business terms are correct in the final lease draft.  A broker can also point to you the right time to agree or when it would be better to walk away from a deal.

 

#7 Help You Read the Fine Print

 

Commercial leases are very complicated, long documents, filled with things you might not understand properly. Lease drafts tend to be very landlord-centric and, sometimes, can be outright ridiculous.  On your own, you may not understand this fact but a tenant rep broker can read the fine print and see clauses that could be problematic in the future.  In addition, they can explain in simple terms what the lease agreement entails before you sign the agreement preventing you from making a poor business decision that could affect you for years.

 

#8 Not Charge You A Penny

 

The tenant representative’s fee is taken care of by the landlord, not your company. Because of this, you can enjoy all the benefits of having one on your team during the search and negotiation process without altering your budget.  It’s a win-win for you!

 

#9 Security

In conclusion, having tenant representation is truly essential in securing good office space for your business. It also will create security in lease negotiations.  The tenant representative helps you identify hidden opportunities in the market and make your search easier.  With all of this said, doesn’t it make sense to hire a tenant rep broker?  What do you have lose?  A lot if you go about your commercial real estate search without representation.

 

No Comments

Renewing Your Lease? Consider This First!

renew

Need to Renew?

 

Renewing a lease can be a pretty overwhelming and complex situation for corporate tenants who are accustomed to simply doing their job and not worrying about real estate.  While that’s tough, it’s also a way to learn what the current market is doing and how the current position of your business can determine whether you can negotiate better lease terms moving forward.

When you truly understand your options during a lease renewal negotiation, you can be a force to be reckoned with.  A tenant representation broker will arm you with market knowledge that you may not otherwise be privy to, help you to negotiate a lower rate, acquire additional amenities, and secure  the best deal possible for your business.

Read on to find out more way you can ensure a good deal for your business as well as how you can protect your future commercial real estate ventures.

 

Negotiate Early…It Only Makes Sense

 

When considering a commercial real estate lease renewal, it is always best to be proactive. Evaluate your situation, determine what is and is not working for your business, and communicate with your landlord 9-12 months before your lease agreement expires. Your landlord will consider these points while reviewing your renewal and will be well aware that time is on your side – time for you to look for a new space if your concerns are not fairly considered.

In the event that you don’t have time, I’ve got you covered.  What I just described is the best-case scenario, however, I have closed Class A office space deals within the span of a business week so I know it can be done.  If you have a tenant representation broker who is “Johhny on the spot” and is as “quick as lightning”, then you’ve got a great teammate fighting for you.  That kind of broker will alert the landlord upfront that “time is of the essence” and the deal needs to close fast.  If the landlord is on board, you’ve got a great situation in front of you and even greater representation behind you.

 

What’s Going On With Your Current Space?

 

Before making any sudden decisions, take the time to analyze how your business is performing in its current commercial space. This is an opportunity to determine if the space is still suitable for your company and its future growth. Items to consider are location, amenities for employees, office configurations, and tech-enabled infrastructure. These can all serve as discussion points in the negotiation of your renewal. There is a possibility that your current landlord may incur these costs if it means keeping your company as a tenant.  When you determine these factors, you can really increase your market knowledge which will facilitate an opportunity for you to have more leverage in negotiation.

 

Understand the Market Conditions

 

The commercial real estate market is dynamic, resulting in continuous changes year after year. It is important to be up-to-date on the current state of the market when looking to sign a new commercial lease or renew your current lease. Look at the market around you; are the rents similar to what you are currently paying for space? Are there other properties that offer additional benefits? Having this knowledge gives you the ability to be well informed while negotiating your current lease. If there is the potential to have some of these added benefits, lease renewal is the time to present them to your landlord.

Once you are more knowledgeable about the current market conditions, ask your tenant representative to negotiate an option or two for you.  The market changes every year so it would best serve you to lock in a good rate for as long as you can.  If it costs too many dollars for the same thing you had last year, it doesn’t make sense.  Don’t you agree?

 

Research Alternative Options

 

Even if you are comfortable in your current commercial space, it is always beneficial to educate yourself on other buildings and owners in the market. You may determine an opportunity that is a better fit for your company. Availabilities, rental rates, and amenities have probably changed since you were last in the market, so it is worth the time to look at your options. During your research, you will become more knowledgeable about the commercial real estate market. Whether you stay in your current space or sign another commercial lease, this information can benefit your negotiation process.

 

Work with a Commercial Real Estate Broker to Negotiate

 

Do not underestimate the importance of using a broker to help you negotiate your commercial real estate lease renewals. In addition to sharing their market expertise, tenant representation brokers are always aware of the current market conditions, opportunities, owners, and other brokers. They provide you with leverage to get the incentives that you and your business deserve and have a genuine interest in seeing you win.  Tenant reps know how important the right office space is for your business. An experienced broker can add value to your commercial lease renewal process, negotiate any required terms, and answer any lease related questions.

No Comments

Looking to Move Your Office? Leave it to the Professionals

office moving boxes

 

You are a successful business owner and everything is booming in your world. 

Your current location has been good to you but your client base has grown dramatically.  The past few years have afforded you a great proof of concept but you know you could offer your clients more.  You know you need a new atmosphere and better location to best serve your clients.  Where do you start?  How do you accomplish that?

It sounds like you a need a tenant representation broker.  A broker will find you a great new space and negotiate you a killer deal.  That sounds simple enough, right?  Let’s delve in a little deeper.  Read on for your “no-cost-to-YOU” solution for getting a better space.

 

#1: YOU are the first priority

 

A tenant rep will have great relationships with many landlords and listing brokers.  As a result, this will lead to a smooth transaction for you.  Tenant representation brokers work on your behalf.  They have no obligation to landlords or the buildings they present. It is their legal, fiduciary responsibility to you to evaluate buildings, locations, and leases without any bias.  Additionally, they will not promote one building over another. Tenant representatives will work to position your deal in the marketplace.  They will also leverage the best possible transaction both qualitatively and quantitatively.  They will help your bottom line.

 

 

#2: Evaluating commercial real estate is a full-time career

 

In order to accurately identify lease opportunities, significant time and work goes into the process.  This is time that you, like many professionals, don’t have to spare. Tenant representation brokers will determine your unique office needs and engage the market.  They will analyze all alternatives and negotiate terms.  Ultimately, they will find you an office space that meets your business needs. This process will ensure that you make the proper real estate decisions while paying attention to your operations.

 

#3: We focus on what we know so you can focus on what you do

 

Rather than taking time to educate yourself on the commercial real estate market, a tenant representation broker will do that for you.  They can manage everything from needs assessments, parking requirements, zoning restrictions, and as well as establishing timelines and the lease execution. The decisions you make now will impact the efficiency, productivity, and profit of your organization.  A tenant representation broker is sensitive to that.

#4: Tenant reps help you to determine what’s best

 

Defining and analyzing your business objectives will help you determine what you need in your office space.  A tenant representative will apply consideration to your budget and future growth. Do your projections include expansion?  Do your employees need to be near public transit?  Do you need all offices on glass?  Is walkability a major factor for your business model?  A tenant representation broker will know all of the right questions to ask.  This will help to determine the right commercial space for you.

 

#5: Tenant representatives have numerous resources…seriously

 

Searching for new space on your own can be frustrating. It is difficult to get an accurate idea of what’s available in the commercial real estate market.  Many websites that have out-of-date or incomplete information.  It may even be hard to get a listing broker to call you back!   A tenant representative will have the most inclusive list of commercial real estate options in the market. Tenant reps have access to exclusive commercial real estate databases, industry relationships and knowledge of off-market options.  This enables tenant reps to give you a variety of quality options that may not be possible to acquire on your own.  If you don’t believe me, try calling a few numbers on the “For Lease” signs and see how things go.  You’ll see that I’m right!

 

#6: Tenant Representatives will handle negotiations

 

Going through the negotiation process can be overwhelming.  Having a tenant representative who knows the market and is exclusively representing your interests is important. They understand the need to capitalize on timing and market conditions.  They will apply negotiation techniques to create the most leverage on your behalf. This will help you receive the best lease terms possible without the stress of negotiating alone.  Lastly, they know the tricks of the trade which will help you.

For instance, if the market price for milk is $3.06 per gallon, you will pay $3.06 for that gallon of milk from the grocery store.  If you are a vendor, you could go directly to that distributor and negotiate a much lower price point.  As a vendor, you have more negotiation power.  Distributors deal with vendors.  HMOs deal with doctors.  Landlords deal with tenant representation brokers.  It’s as simple as that.  Landlords will always negotiate with tenant representation brokers on your behalf.  They do so because they trust the tenant rep to qualify their client before bringing them to the space.  This saves the landlord a time by not having to qualify the prospective tenant upfront.

Tenant representatives can get you a ton of other incentives.  Some include free rent and a break on the rental rate.  They may even be able to get you more concessions!

 

How Much Is It Going to Cost Me?

On a final note, remember when I said you can get your space at no cost to you?  Let me clarify!  Tenant representation services are free because the landlord pays your representation for you.  I know that sounds super crazy but that IS how this crazy thing works.  The landlord sets aside a budget for representation when he/she acquires a commercial property.  Whatever that budget is, is typically split down the middle.  Half goes to the landlord’s representation and the other half goes to the tenant’s representation.

Why would a landlord do such a thing, you ask?  A landlord is willing to pay a tenant rep’s commission because he/she feels confident that they are bringing a viable tenant to their establishment.  They are willing to pay for that.  I know it’s weird and I don’t make the rules…I just play by them.  If you are looking for office space, I’m more than happy to point you in the right direction.  I hope you found this helpful!

No Comments

Commercial Real Estate Conflict – A Real Hurdle for Consideration

commercial real estate conflict

 

Resist the Urge

 

You are driving in your car and you see a  “For Lease” sign on the building. You happen to be in the market for space and you want to call for more information.  Logically, that makes the most sense, however, the phone number you see is for the building owner’s representation.  If you do not have your own representation, the situation can quickly become unfavorable for you.  You are one of the lucky ones if you DO know you are dealing with the competition but, unfortunately, many business owners aren’t even aware of the conflict in the first place.  They simply see a desirable building and call the number none the wiser.  Resist the urge to call the number on the “For Lease” sign.  Instead, take down the number and the broker’s information and give it to you tenant representation broker.

 

This is when the tenant representative rides in on the white horse and forsakes all landlord allegiances to represent only the tenant in commercial real estate transaction. Tenant representation has taken root in corporate America, where space users seek out tenant-only brokers and tenant-only brokerage firms have grown in response to this demand.

 

Get Exclusive

 

Tenant representation brokers are commercial real estate brokers who work exclusively for the tenant and never represent the landlord.  The tenant representative role developed in response to the conflicts of interest that were, and still sometimes are, rife in the industry. They are now a universally embraced, specialized sector of commercial brokerage, with a broader range of services focused on the unique needs of a tenant such as space planning, construction management, lease renewal consulting, site search, financial analysis and strategic negotiations.

 

Risk of Conflict

 

There is a very real risk of working with a broker who has blatant conflicts of interest.  It is in your best interest to be intentional when searching for a broker who only focuses on tenant representation.  In the old model, the landlords and their brokers held all the cards. The tenants were merely a means to an end. With the advent of tenant representation, the industry is waking up to the reality that the tenants actually hold all the cards, because the tenants pay the rent. In truth, landlords are utterly dependent on the rent tenants pay as their sole source of income.  Unfortunately, many tenants don’t realize they hold all the cards and have all of the power.  A good tenant representation broker will enlighten you on the leverage you actually do have.

No Comments

Why Should I Hire My Broker Exclusively?

hire my broker exclusively

Georgia Real Estate Law requires a tenant to have a statement in writing of their desire to hire a broker to represent them.

If you are a tenant looking for commercial space on your own, you have probably been speaking to the leasing agent who is the broker (or leasing agent) for the seller. The seller’s agent cannot offer any advice or guidance to the tenant and is not obligated to keep any information confidential. If you engage a tenant rep broker, you are stating that he/she legally represents you. This ensures there is no confusion about whom represents whom. This representation includes investigation and negotiation of the commercial property and the neighborhood that you choose, as well as the process for getting you the best deal.

Tenant representation is free to you. The seller pays the tenant rep broker to bring a tenant to them.  Typically, landlords have built in commissions for tenant representatives as well as for landlord representation.  If you opt to not engage a tenant rep broker to represent you, the entire budgeted commission goes to the leasing agent negotiating against you. The leasing agent does not care about your well-being and doesn’t have your best interest at heart. You will be required to sign a Letter of Authorization (LOA) which allows the tenant rep broker to work exclusively for you to find the best commercial space for your business.  It’s a simple agreement that can be negated with a one line email stating, “I no longer need your representation.” Then you are free to engage a different broker or find the space on your own if you so desire.

Often clients have difficulty articulating exactly what they want for their business.

You may start out by telling your broker exactly what type of space you are looking for but your preferences may actually change as you go around viewing different spaces. As a broker, I listen and watch the reaction each client has to every space I show him/her. I have learned to pay attention to the visceral reactions a client exhibits when viewing a property for the first time. This allows me to get a better sense of what they really want and, from there, I can narrow down the search. Going from broker to broker will not allow you to form this type of beneficial relationship which is the glue that holds good brokerage and good decision making together. Remember, your broker is going to work hard for you because he/she is never paid until you are happily in your new commercial space.  Getting your deal closed is a mutual goal.

Your tenant rep broker will also be able to identify any potential timeline issues by communicating to the leasing agent at the start of the transaction.  Some issues may include a committee approval which most business owners may not be aware of.  On occasion, the landlord will hire a large leasing agency to represent their interests.  The leasing agency may have a board or committee who must come together to vote on final lease structures which could cause a delay due to the number of parties involved.  That is just one unforeseen roadblock an exclusive tenant rep broker can prepare you for but your broker will be aware of many more potential pitfalls.

No Comments

Your Lease Should Protect You

Your Lease Should Protect You

Although you do your best as a small business owner to forecast revenue and expenses, sometimes there are extenuating circumstances that affect your business’s success or failure. Since leasing office space spans such a long gap of time (relative to the small business cycle), is legally binding and commits capital over a period of time, it is inherently risky. Using a worst case scenario (terminating your lease early) and best case scenario (needing larger space), below are some helpful tips can that assist in the reduction of the overall risk associated with signing a commercial lease.

There are 3 ways you can protect yourself  

from a worst case scenario situation with your lease to include a Personal Guarantee, Assignment or Subletting, or Death and Disability clauses.  By signing a personal guarantee, you as an individual (typically the business owner) becomes personally liable for the lease payments. For example, in the case of bankruptcy, if you sign a 5 year lease on a property and your business only survives for 3 years into your lease, you will have to make the last two 2 years of payments from your personal accounts. When signing a lease make sure you understand what you what you are personally liable for.

Landlords typically ask for personal guarantees on space when they have to spend a lot of money into customizing the space to suit your business or if you, the business owner, are a start-up company.  Often times, a start-up company is viewed as a risk to the landlord so they may want to share the risk equally with the tenant. If this is the case, you can always negotiate.  Perhaps your broker can negotiate that you only personally guarantee the amount of improvements that are specific to your business or have the dollar amount decrease as you get closer to the lease expiration date.  If you happen to have a good broker, the landlord may agree to lift the personal guarantee if you show good payment history for a number of years (usually 2).

Having the right to assign the lease or sublet a portion or all of your office can alleviate many of the worst case scenarios that would result in your having to terminate your lease. If you are preparing to sell your business or feel that there is a chance you would need to relocate your office to another city or town, negotiating the right to assign the lease to another business willing to take it over or subletting some or all of the space can protect you in the future.

The death and disability clause is used in a lease to terminate the agreement should a specified individual (usually the business owner) pass away or become permanently disabled. For example, a law firm with only one lawyer and a receptionist might want to negotiate a death or disability clause into the lease so that if the lawyer passes away or cannot practice law due to an disability, the law firm (which now has no practicing attorneys) won’t  be liable for the remainder of the payments.

How to prepare yourself for a best case scenario

There are also ways you can protect yourself in a best case scenario situation with your lease where you need to acquire a bigger space to accommodate the needs growth of your business. You may want to include a Relocation/Expansion and Right of First Refusal clause to your lease agreement.  Negotiating a relocation clause in your lease typically gives you the right to move into any other office that the landlord has available for lease. Specifications vary so make sure you’re fully aware of the guidelines.

A right of first refusal in your lease means that you would like the landlord to ask you first if you would like to lease any adjacent spaces to your current office before they can lease it to another customer. “First rights” are beneficial because it could save you the cost of moving your entire office into a larger space. They are usually set up under a tight time frame, for example, you might only have 24 hours to tell your landlord if you’re going to take the space or not. Normally you will have to meet or beat the offer of the third party, so it might not be worthwhile to save the cost of the move if the terms and conditions of the deal don’t fit well into your business model.  Even with a tight time frame in place, be sure to think our your next move clearly and seek the advice of those you trust with your business dealings.